The transfer of risk taking along the supply chain

Manh Cuong Nguyen (), Viet Dang and Tri Tri Nguyen ()
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Manh Cuong Nguyen: University of East London
Tri Tri Nguyen: University of Roehampton

Review of Quantitative Finance and Accounting, 2023, vol. 61, issue 4, No 6, 1378 pages

Abstract: Abstract We show that suppliers’ risk taking is positively influenced by that of their major customers. This result is consistent with the notion that when major customers take more risk to enhance their bargaining power and rent extraction ability, suppliers may respond by also engaging in more risk taking to improve their bargaining positions. Further cross-sectional analysis shows that the transfer of risk taking along the supply chain becomes stronger when suppliers and customers have more comparable bargaining power and when the former have greater risk-taking capacities. Our findings are robust to a series of tests addressing endogeneity concerns.

Keywords: Risk taking; Customer–supplier relationships; Supply chain; Bargaining power (search for similar items in EconPapers)
JEL-codes: G30 G32 L14 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11156-023-01186-9

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